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5 Mid-Cap Healthcare Dividend Stocks with Perfect Earnings Growth: RDY, PPDI, LNCR, MR, SHPGY

One sector with good future perspectives is the healthcare sector due to a growing aging population. But the whole sector contains several industries with slow growth and decreasing market share (e.g., drug manufacturing). Other industries running very well (e.g., medical instruments). However, we can not distinguish between good and bad industries. Every difficult industry also has good companies. It is more important to take a closer look at the companies. Recently, I screened the sector by stocks with a positive dividend yield as well as high expected mid-term earnings per share growth (more than 15% yearly for the upcoming five years).

12 companies fulfilled these criteria. Only two of them came from the drug manufacturing industry, the industry with the highest dividend yield. Roughly 42% originate from the medical instruments and supplies industry. Unfortunately, most of the companies were very small and they had a market capitalization of less than $300 million. The high growth was explainable with the small size and led to higher risks. I like to focus only on stocks with a market capitalization above $2 billion. These are the results:

1. Dr. Reddy's Laboratorires (RDY) hasa market capitalization of $5.07 billion. The company employs 14,923 people, generates revenues of $1,439.17 million and has a net income of $212.72 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $323.26 million. Because of these figures, the EBITDA margin is 22.46% (operating margin16.91% and the net profit margin finally 14.78%).

The total debt representing 24.81% of the company’s assets and the total debt in relation to the equity amounts to 51.25%. Due to the financial situation, the return on equity amounts to 24.84%. Finally, earnings per share amounts to $1.33 of which $0.22 were paid in form of dividends to shareholders last fiscal. Earnings are expected to grow by 22.95% for the next five years.

Here are the price ratios of the company: The P/E ratio is 22.53, P/S 3.62 and P/B ratio 5.79. Dividend Yield: 0.84%. The beta ratio is 1.08.[/b]

[b]2.
Pharmaceutical Products (PPDI) hasa market capitalization of $3.78 billion. The company employs 11,000 people, generates revenues of $1,470.57 million and has a net income of $127.33 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $247.55 million. Because of these figures, the EBITDA margin is 16.83% (operating margin12.41% and the net profit margin finally 8.66%).

The total debt representing 0.00% of the company’s assets and the total debt in relation to the equity amounts to 0.00%. Due to the financial situation, the return on equity amounts to 9.72%. Finally, earnings per share amounts to $1.43 of which $0.60 were paid in form of dividends to shareholders last fiscal. Earnings are expected to grow by 16.34% for the next five years.

Here are the price ratios of the company: The P/E ratio is 23.23, P/S 2.57 and P/B ratio 3.09. Dividend Yield: 1.81%. The beta ratio is 0.71.

3. Lincare Holdings (LNCR) hasa market capitalization of $2.11 billion. The company employs 10,225 people, generates revenues of $1,669.20 million and has a net income of $181.57 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $450.96 million. Because of these figures, the EBITDA margin is 27.02% (operating margin 20.02% and the net profit margin finally 10.88%).

The total debt representing 24.17% of the company’s assets and the total debt in relation to the equity amounts to 49.60%. Due to the financial situation, the return on equity amounts to 19.12%. Finally, earnings per share amounts to $1.90 of which $0.40 were paid in form of dividends to shareholders last fiscal. Earnings are expected to grow by 15.67% for the next five years.

Here are the price ratios of the company: The P/E ratio is 12.56, P/S 1.22 and P/B ratio 2.21. Dividend Yield: 3.49%. The beta ratio is 0.64.

4. Mindray Medical Intl. (MR) hasa market capitalization of $3.21 billion. The company employs 6,400 people, generates revenues of $704.31 million and has a net income of $155.47 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $190.94 million. Because of these figures, the EBITDA margin is 27.11% (operating margin 23.39% and the net profit margin finally 22.07%).

The total debt representing 0.50% of the company’s assets and the total debt in relation to the equity amounts to 0.60%. Due to the financial situation, the return on equity amounts to 19.35%. Finally, earnings per share amounts to $1.35 of which $0.30 were paid in form of dividends to shareholders last fiscal. Earnings are expected to grow by 15.10% for the next five years.

Here are the price ratios of the company: The P/E ratio is 20.63, P/S 4.22 and P/B ratio 3.03. Dividend Yield: 1.18%. The beta ratio is 1.24.

5. Shire Plc (SHPGY) hasa market capitalization of $18.82 billion. The company employs 4,183 people, generates revenues of $3,471.10 million and has a net income of $586.60 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,043.40 million. Because of these figures, the EBITDA margin is 30.06% (operating margin 22.73% and the net profit margin finally 16.90%).

The total debt representing 20.56% of the company’s assets and the total debt in relation to the equity amounts to 45.19%. Due to the financial situation, the return on equity amounts to 26.95%. Finally, earnings per share amounts to $4.07 of which $0.39 were paid in form of dividends to shareholders last fiscal. Earnings are expected to grow by 15.57% for the next five years.

Here are the price ratios of the company: The P/E ratio is 24.64, P/S 5.14 and P/B ratio 7.37. Dividend Yield: 0.48%. The beta ratio is 0.80.

About the author:

Dividend
I am a private full time investor searching for investments and investment ideas.

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